Digital payment company PayPal Holdings (PYPL) has generated a return of 39% in the last 12 months. Since the start of 2019, the stock is up 29%. It’s gained 171% in the last three years and 187% in the last five years.
The rises in the company’s sales and earnings have driven its market cap growth. Its revenue rose from $9.24 billion in 2015 to $15.45 billion in 2018. Its EPS have risen at a CAGR (compound annual growth rate) of 24% in the last five years.
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PayPal stock is currently trading 0.7% below its 52-week high of $109 and 54% above its 52-week low of $70.22. With a relative strength index score of 71, PayPal stock is trading in overbought territory.
Is PayPal overvalued?
PayPal has a forward PE ratio of 54.8x for 2019. For 2020, this ratio is 44.7x. Analysts expect PayPal’s sales to rise 16.3% in 2019 and 17.6% in 2020. Its EPS are expected to rise 19% in 2019 and 21% in 2020.
PayPal’s EPS could grow at a CAGR of 21% over the next five years. It doesn’t pay a dividend, and it looks overvalued even if its shares fall 40%.
Of the 44 analysts covering PayPal, 32 have given it “buy” recommendations, 12 have given it “hold” recommendations, and none have given it “sell” recommendations. The average 12-month target price for PayPal is $104.37, which indicates a potential downside of 3.5% from its current level.